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Analysts at TD Securities have changed their call and now look for 50bps of easing in 2020, with rate cuts in January and April.

Key Quotes

“While the Canadian economy has thus far been resilient to global headwinds, recent actions taken by the US and China will result in a larger drag on growth once new tariffs go into effect. This should prompt the BoC to provide more stimulus to offset the impact of global headwinds, although recent messaging suggests there is a very high bar to do so by October.”

“Underscoring the BoC’s (relatively) constructive outlook is a healthy starting point; Q2 GDP was stronger than expected at 3.7%, and even with an undesirable composition (domestic demand contracted by 0.7%) the output gap is nearly closed. Core CPI remains target at 2.0% on average and labour market strength has shown no signs of abating, which supports the narrative that soft Q2 consumption was a oneoff.”